COMPANY TOWN

Icahn's hostile offer rejected

Lions Gate Entertainment Corp. on Tuesday rebuffed investor Carl Icahn's hostile bid to take control of the Santa Monica-based movie and television studio for $6 a share.

The move was widely expected after Lions Gate rejected the activist shareholder's previous bid at the same price two weeks ago as Icahn attempted to raise his stake in the company to nearly 30% from 18.9%.

"We believe nothing has changed -- the offer remains financially inadequate and still does not reflect the full value of Lions Gate shares," Lions Gate Chief Executive Jon Feltheimer said in a statement.

The company said its board of directors had voted unanimously to decline Icahn's offer to buy all outstanding shares.

Feltheimer said Icahn was bidding for full control of the company "without offering a meaningful vision, without demonstrating a relevant track record of industry experience and without paying a control premium."

Icahn did not respond to requests for comment but has said that the studio needs to slash costs and avoid expensive acquisitions of film libraries such as Metro-Goldwyn-Mayer Inc. without shareholder approval.

Lions Gate's rejection of Icahn's latest bid comes a day after the studio submitted an offer to buy distressed MGM, competing against Time Warner Inc. and industrialist Len Blavatnik's Access Media.

It is thought to be highly unlikely that Lions Gate's offer, which people familiar with the matter say is less than Time Warner's $1.5-billion bid, will prevail.

Likewise, many on Wall Street and in Hollywood believe that Icahn's $6-a-share bid is inadequate to gain control of the company.

"There is not going to be any of the top 10 shareholders giving away their stock at $6 a share," media analyst David Miller of Caris & Co. said in an interview, noting that if Icahn is really serious he should consider raising his offer. "Nine dollars a share would raise a couple of eyebrows," Miller said.

In a report published Monday, Miller said it appeared that Icahn's immediate goal was to squeeze more cash out of the company.

"While a break-up of Lions Gate and sale of the various pieces is certainly a plausible scenario in the distant future," Miller wrote, "we believe Icahn sees an opportunity to morph Lions Gate into a higher-margin enterprise through a massive overhead slash, especially in the theatrical release division."

Icahn has been highly critical of Lions Gate's management team, led by Feltheimer and Vice Chairman Michael Burns, for in his judgment spending too much on overhead, movies and last year's acquisition of TV Guide Network.

However, in a recent Wall Street Journal story, Icahn reversed himself and praised management's decision to buy TV Guide Network and TVGuide.com.

Icahn has also said he plans to sue to block Lions Gate's intention to adopt a so-called poison pill plan to discourage hostile takeovers that shareholders will vote on May 4.